Lahore High Court has vacated the stay granted to banks against the operation of section 165A (access to banking information) of the Income Tax Ordinance, 2001 as banks would be immediately required to provide online access of the said data to the Federal Board of Revenue (FBR). It is learnt on Friday that the banks are now bound to provide online access and other information to FBR under section 165A of the Income Tax Ordinance, 2001. The online banking information would help the FBR in the ongoing exercise of documentation of economy and broadening the tax-base necessary for accelerating growth. Moreover, the FBR would effectively utilise the banking information for detection of money laundering cases, financial crimes and can check funds used for terrorist financing. LHC has vacated the stay granted against operation of section 165A of the Income Tax Ordinance, 2001, in a writ petition filed by various banks. Section 165A of the Income Tax Ordinance, 2001 was introduced through the Finance Act 2013 to align tax laws with the international practices. Under the said section, every banking company shall provide to the Board: a) online access to its central database containing details of its account holders and all transactions made in their accounts; b) lists containing particulars of deposits aggregating rupees one million or more made during each of the preceding calendar month; c) details of credit card transactions of one lakh or more in a month; d) list of loans written off exceeding rupees one million during a calendar year; and e) copies of each currency transactions report and suspicious transactions report generated and submitted by it to the Financial Monitoring Unit under the Anti-Money Laundering Act, 2010 (VII of 2010). To implement the provisions of section 165A, Banking Companies Reporting Requirements Rules were also issued on February 19, 2014. Internationally the concept of banking secrecy has been done away with. All over the world, various banking transactions are reported to the concerned tax departments to address the concerns regarding money laundering and tax evasion. The objective of the change is to curb tax evasion and to reduce burden on the existing taxpayers. This measure would also be helpful in the broadening of tax base vital for expanding resource base, sources said. Sub-section (4) of section 165A of the Income Tax Ordinance, 2001 clearly provides that all information received under this section shall be used only for tax purposes and kept confidential. To protect the interests of the banking sector and their customers secrecy, it has been ensured that such information shall be kept secret with certain built-in safeguards. It has been clearly stated in section 165A that the said information would only be available to the Chairman and Member of FBR.[Rule 39D(3)] The protection has been provided to the banking companies and their officers that no civil, criminal or disciplinary proceedings can be initiated against them for furnishing information under section 165A of the Income Tax Ordinance, 2001. All information received under section 165A shall be used only for tax purposes and kept confidential. The powers under this section shall be utilised only for obtaining information in respect of persons who have not filed tax returns and this section will not be pressed into service for obtaining information regarding taxpayers who have filed their returns, they added. Under SRO 115/1/2014 issued by the FBR, every bank will be required to submit to the Board a monthly account holders deposits statement of those who have deposited Rs 1 million or above in a month. The information, however, may not be provided by the banking company in respect of a person who holds the National Tax Number and has also filed return of income for the immediately preceding tax year. The banks shall provide information under section 165A of the Income Tax Ordinance of Account Holders Deposits including Statement, Credit Card Payments Statement, Written-off Loans Statement, currency transactions report and suspicious transactions report. Each banking company shall furnish to the Board a monthly Credit Payments Statement regarding information of persons who have made credit card payment of Rs 100,000 or more during a month and every bank would provide an annual Written-off Loans Statement about loans written-off exceeding Rs 1 million or more during a year. The information and online access required to be provided under clause (a) of sub-section (a) of section 165A shall be provided by the reporting company through online access to its central database containing details of its account holders and all transactions made in their accounts.
Posted on: Sat, 27 Dec 2014 14:56:33 +0000
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